Ripple CEO Brad Garlinghouse has expressed concerns about the potential consequences for the crypto industry if the U.S. Securities and Exchange Commission (SEC) succeeds in its recent appeal.

Speaking about the cross-appeal filed by Ripple, Garlinghouse highlighted the issue of whether an “investment contract” under the Securities Act requires an explicit agreement.

Ripple CEO Highlights Caution Should US SEC’s Appeal Win

During a recent discussion, entrepreneur Anthony Pompliano questioned Ripple CEO Brad Garlinghouse on the SEC’s stance and its implications for the crypto sector. Pompliano raised concerns about how the classification of crypto tokens as “investment contracts” might affect platforms like Coinbase, which facilitate trading of various tokens.

Ripple CEO responded by warning that a US SEC victory on this issue could disrupt the industry, forcing businesses to consider relocating outside the U.S. This comment comes as the firm recently filed a cross-appeal seeking clarification on whether an investment contract under U.S. securities laws requires a formal agreement between parties.

This question lies at the heart of its ongoing suit against the regulator, which claims that Ripple’s sale of XRP constitutes an unregistered securities offering.

“If the SEC were to prevail on this point, it is a mess for the industry,” Garlinghouse said. “It just pushes more of it offshore.” Ripple’s legal team argues that XRP, much like Bitcoin, does not fit the definition of a security. Stuart Alderoty, Ripple’s Chief Legal Officer, emphasized that the court has already ruled XRP as a non-security, a classification that the US SEC is not contesting.

US SEC Criticized for Inconsistency

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Pompliano also questioned Garlinghouse on the apparent contradiction in the Securities and Exchange Commission’s actions—allowing Coinbase to go public and permitting Bitcoin ETFs, while simultaneously cracking down on other crypto firms.

Garlinghouse remarked that the regulator’s decisions seem inconsistent, suggesting the agency “approved the ETF kicking and screaming.” He implied that regulatory approvals are being granted reluctantly, underscoring the challenges the industry faces in securing clear guidelines.

As a result, when asked to say something positive about the regulator, Garlinghouse replied humorously, “There’s gonna be a new SEC chair.” This statement aligns with ETF analyst Eric Balchunas from Bloomberg Intelligence. According to Eric, the future of crypto ETFs may be influenced by the outcome of the upco